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Friday, February 14, 2014
Petroceltic International and Sonatrach have reached an agreement on the sale of an 18.375% stake in Algeria’s Isarene PSC. The assignment has been effected by way of the sales purchase agreement (SPA), under which Sonatrach will acquire the interest in the Isarene PSC covering Blocks 228 and 229a. The amendment to the Isarene PSC required to give effect to the transfer was signed by Sonatrach, Petroceltic, and Enel at a ceremony in Algiers on February 12.
Sonatrach acquired the interest by exercising its right of pre-emption in relation to a transaction with similar terms previously agreed between Petroceltic and another oil and gas company.
The terms of the agreement with Sonatrach, which are identical to those announced in October, provide for a consideration of up to a maximum amount of $180 million. The consideration comprises $20 million payment on completion of the transaction, a further $140 million payment of Petroceltic’s share of Isarene project development cost from the effective date of July 4, 2013, and contingent payments of up to $20 million based on the achievement of certain project related milestones.
Formal completion of this assignment remains subject only to final ratification by the Algerian government authorities. Upon completion of the transaction, Sonatrach will hold a 43.375% participating interest in the Isarene PSC, Petroceltic will hold 38.25% and Enel will hold 18.375%. Operations in the development phase will be undertaken by the Groupement Isarene, a joint venture between Sonatrach, Petroceltic and Enel.
Brian O’Cathain, chief executive of Petroceltic, commented: “The second Isarene farm-out is a major commercial milestone. Petroceltic has had a positive and mutually beneficial relationship with Sonatrach throughout the exploration, appraisal and now development phases of the Isarene PSC. We believe that Sonatrach’s decision to increase its interest as we commence development works is an indication of their confidence in the technical and financial strength of the project and the experience and capability of the team responsible for delivering it. We look forward to continuing to work with Sonatrach and Enel to deliver the Ain Tsila Project and maximize the value of this important national resource for Algeria.”
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